New Jersey Democratic Attorney General Peter C. Harvey's Office, after two months of study, said last week that Douglas R. Forrester==the Republican candidate for governor==did nothing criminal by using proceeds from a captive insurance operation for his campaign.
Money from the Washington, D.C.-based Heartland Insurance Company surfaced as a campaign issue in August. Mr. Forrester is running against Democratic U.S. Sen. Jon Corzine in a contest for a post that was previously held by Democrat Jim McGreevy, who resigned after confessing he had an extramarital gay affair. Democratic Senate President Richard Codey has filled out the term in an acting capacity.
At issue for Mr. Forrester were a variety of state election statutes, part of the criminal law, which outlaw political contributions by insurance corporations and other businesses. The measure was enacted in 1911 when a slew of reform bills were passed to halt the influence of election spending by a variety of industries.
When the matter first surfaced, a representative for Heartland, Peter J. McDonough, had said there was no violation because the company is chartered in Washington, D.C., its premium is collected there and it is regulated by the Washington Department of Insurance, Securities and Banking.
Mr. Forrester, he explained, had his attorney seek a ruling from New Jersey officials to put the matter to rest.
Democrats had argued that Mr. Forrester, who holds a majority interest in the company, should be prosecuted because the company has its largest office presence in New Jersey and does business in the state
Mr. Forrester has a 51 percent interest in Heartland Fidelity Inc., a pharmacy benefits captive.
Assistant Attorney General Ronald Susswein, with the Attorney General's Division of Criminal Justice, wrote in a letter to Mr. Forrester's attorney, John J. Farmer Jr., that after careful study of prior Attorney General opinions relied on by Mr. Forrester, "we have determined that criminal prosecution is not appropriate."
The letter, coming only 12 days before the election, noted that the finding in the letter did not apply in future, warned that it should not be seen as a precedent, and advised that Mr. Harvey would be reviewing past opinions to possibly issue "further guidance."
Mr. Forrester is the owner of Benecard, which, according to Mr. McDonough, manages prescription purchasing and dispensing fees for self-insureds and organization pharmaceutical plans, and also offers fully-funded plans with a fixed limit.
He said Heartland is the captive of two organizations made up of Benecard clients==Benecard Association Trust and Benecard Association. Mr. McDonough explained that the captive, created in 2003, is managed by the McCarren Ferguson captive management company in Washington and has a locally-based manager. It provides stop-loss insurance for the programs that go over their contract spending limit, he said.
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